Government Impostor Scams Continue to Be Costly

Better Business Bureau warns people to use caution if they are contacted by a government agency demanding money or offering a government grant for a fee. The COVID-19 pandemic saw a rise in reports of scammers pretending to be from government agencies.

In 2021, consumers reported losses of more than $445 million in government impostor and government grant scams to the Federal Trade Commission (FTC), up from $175.4 million reported in 2020. The median loss in government grant scams rose from $800 to $1,000, making it one of the more expensive scams reported to BBB’s Scam Tracker in 2021. Scam Tracker reports also showed government impostor scams as the second-most reported scams by businesses in 2021.

On BBB’s Scam Tracker, one Connecticut resident shared how she was almost conned out of hundreds of dollars earlier this year in a government grant scam. The consumer reported that she received a message on Facebook messenger from a “dear friend,” urging her to call a number to sign up for a “Community Service Block Grant.” The friend told her that he had just filled out the application and received money within five hours.

“I respect this friend very much and trust his advice. When I communicated with the agent he wanted my name address. I was communicating with my friend as I was answering the questions. My friend told me to answer them truthfully and honestly, that this was legitimate . Once I did that the agent told me that I was eligible for this program. He then told me to go to a nearby gas station or store and get an activation card. I told the agent that I didn’t have $500. He asked how much did I have and I told him $25. He told me when I got $200 that I could communicate back with him. Needless to say I had no more communication with him. Apparently they had hacked my Facebook account to get our relationship and used that to try to scam me,” the resident reported to BBB.

How the scams work:
In government impostor schemes, scammers may spoof a legitimate government agency phone number to call a potential victim. The scammer threatens arrest if the consumer fails to comply with their requests. Social Security Administration (SSA) impersonators warn the targeted individual that their identity has been stolen and ask them to verify their social security number and other personal information. Ironically, the individual may then actually become a victim of identity theft. Fake Internal Revenue Service (IRS) callers threaten arrest unless back taxes are paid.

In government grant fraud, scammers contact the consumer using an acquaintance’s hacked social media account. The consumer is told about a lucrative grant program that only costs a small fee to receive. Once the first payment is sent, the scammer continues to add various fees. The consumer never receives the grant and loses whatever money and personal information they sent to the scammers.

Social Security scams are the most reported, most expensive

When it comes to government impostor scams, no agency is more popular than the SSA. More than two-thirds of the government impostor scams reported to BBB Scam Tracker in 2021 mentioned Social Security. Consumers who reported to Scam Tracker in 2021 lost nearly $500,000 in these SSA scams.

Victims learn there is no such thing as easy grant money

With the federal government issuing billions of dollars in relief funding during the pandemic, scammers took full advantage by making up various grant programs. While the number of grant scams reported is down, those victimized are losing more money than they did prior to the pandemic.

Government grant scams reported to FTC fell 43 percent from 2019 through 2021. However, the median loss increased from $500 to $700 from the same period. More than a quarter of people who reported a government grant scam in 2021 lost money.

Tips to avoid government impostor or government grant scams
·Government agencies do not call people with threats or promises of money.
·Social Security numbers are never “suspended.” 
·Never provide your bank account or other personal information to anyone who calls you claiming to be associated with the IRS. 
·Never pay with a gift card, wire transfer or cryptocurrency.
·Don’t pay for a “free” government grant.